The world semiconductor market is witnessing full-scale tectonic shifts as not only global semiconductor leaders such as Intel but IT companies such as Google, Amazon and Softbank aggressively enter the IoT-oriented system semiconductor sector.
According to the semiconductor industry, the rise of the internet of things (IoT) as a replacement of smartphones which put an end to the PC era is expected to lead to system semiconductors’ control over the future semiconductor market. System semiconductors belong to the non-memory sector.
System semiconductors are non-memory semiconductors for electronic devices such as sensors, communications and processors and are said to tower over memory semiconductors for data saving in terms of added value. The system semiconductor market was estimated at US$340 billion, accounting for over 70% of the entire semiconductor market in 2014.
In particular, the system semiconductor market is likely to change rapidly with the IoT at the center. Market research firm Gartner forecast that the IoT system semiconductor market will grow 40% a year on average from US$ 12 billion in 2015 to US$ 35 billion in 2020.
In fact, the slowdown of the growth of smartphones which took the lead in the growth of the semiconductor market is prompting global semiconductor companies to make aggressive investment with the IoT as a new growth engine. Semiconductor market leader Intel already launched a drone and a VR device based on its IoT system semiconductor of Joule. ARM dominating the mobile system semiconductor design market is leading the way by unwrapping Cortex M7, a processor with its focus on IoT functions.
Recently, leading global IT companies are making a foray into the IoT system semiconductor market one after another. There is a clear consensus in the semiconductor industry that Japan’s Softbank took over ARM by investing US$ 32 billion in July in order to take control of the IoT-based system semiconductor market.
Amazon, the world’s biggest online seller, began to invade the market by launching Alpine, an IoT semiconductor after taking over Annapurna Lab, an Israeli semiconductor design firm last year. Google, the largest IT company in the world began to develop IoT semiconductors by acquiring Agnilux, a semiconductor design firm in 2010. This year, the global search giant has its eyes on the system semiconductor market while releasing TPU, an IoT-specialized processor.
By contrast, Korea, the number-one leading nation which accounts for over 50% of the world memory semiconductor market is not making some moves in M&As or the expansion of investment in the IoT semiconductor market.
It is said that this year, Samsung Electronics will maintain the size of its capital expenditures or CAPEX at the US$ 3.5 billion level which is the same as last year. Some industry watchers say that Samsung’s investment volume is conservative compared to other global players expanding investment in system semiconductors. Samsung Electronics is planning to expand facilities for V NAND semiconductors which belong to the memory sector in the second half of this year, too.
It is not easy for SK Hynix to expand its system semiconductor business as the company separated its system semiconductor division (currently, MagnaChip Semiconductor) and began to zoom in on the memory semiconductor market. Even though SK Hynix is maintaining some of the system semiconductor business such as CMOS image sensors (CISs) display driver ICs (DDIs) and power management ICs (PMICs), its new investment focuses on memory semiconductors.